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Domestic passenger vehicle sales drop 7% to 18-month low in June, two-wheeler sales fall 3%: SIAM data

The article published on Moneycontrol, titled "Domestic passenger vehicle sales drop 7% to 18-month low in June, two-wheeler sales fall 3%: SIAM data," provides a detailed overview of the performance of the Indian automobile industry in June 2024. Drawing on data released by the Society of Indian Automobile Manufacturers (SIAM), the report highlights a significant decline in domestic passenger vehicle (PV) sales, which fell by 7 percent year-on-year to an 18-month low. Additionally, two-wheeler sales also experienced a downturn, declining by 3 percent during the same period. The article delves into the reasons behind these declines, the performance of other vehicle segments, and the broader implications for the Indian automotive sector amidst changing market dynamics and economic conditions.

According to SIAM data, domestic passenger vehicle sales in June 2024 stood at 2,81,566 units, a notable drop from the 3,02,000 units sold in June 2023. This decline marks the lowest monthly sales figure for passenger vehicles in the past 18 months, signaling a worrying trend for the industry. The article attributes this downturn to several factors, including a high base effect from the previous year, reduced consumer demand, and external challenges such as heatwaves that deterred showroom visits. Furthermore, the lack of new model launches and limited consumer incentives during the month contributed to the subdued sales performance. The report also notes that inventory levels at dealerships have risen, with stock piling up to an estimated 50-55 days, prompting concerns about overstocking and potential discounts in the coming months to clear unsold units.

In the two-wheeler segment, sales declined by 3 percent year-on-year, with 13,42,341 units sold in June 2024 compared to 13,88,000 units in the corresponding month of the previous year. This segment, which includes motorcycles and scooters, has been a critical driver of volume for the Indian automobile industry, particularly in rural and semi-urban markets. The decline in two-wheeler sales is attributed to similar factors affecting passenger vehicles, such as adverse weather conditions and a slowdown in rural demand. Additionally, the article points out that inflationary pressures and rising input costs have made consumers more cautious about discretionary spending, further impacting sales in this category. Despite the monthly decline, industry experts remain cautiously optimistic about the long-term growth potential of two-wheelers, especially with the upcoming festive season, which traditionally boosts sales.

The article also sheds light on the performance of other vehicle segments during June 2024. Three-wheeler sales showed a positive trend, registering a growth of 5.1 percent year-on-year, with 59,544 units sold compared to 56,000 units in June 2023. This growth is seen as a silver lining for the industry, reflecting sustained demand for last-mile mobility solutions in urban and rural areas. However, the commercial vehicle (CV) segment faced challenges, with sales declining by 4.7 percent to 72,747 units from 76,000 units in the previous year. The drop in commercial vehicle sales is linked to a slowdown in infrastructure projects and reduced fleet utilization due to seasonal factors.

SIAM President Vinod Aggarwal, quoted in the article, provided insights into the broader industry outlook. He acknowledged the challenges faced in June, including the impact of extreme weather conditions and a high base effect from the previous year. However, Aggarwal emphasized that the industry remains resilient, with expectations of a recovery in the coming months driven by the monsoon season's progress and the festive period. He also highlighted the role of government policies in supporting the sector, such as incentives for electric vehicles (EVs) and infrastructure development, which could stimulate demand in the long term. Aggarwal noted that while passenger vehicle sales have been hit hard, the shift toward sustainable mobility solutions, including EVs and hybrids, continues to gain traction, albeit at a slower pace than anticipated due to cost concerns and inadequate charging infrastructure.

The article further explores the growing interest in electric vehicles within the Indian market, despite their relatively small share of total sales. Electric two-wheeler sales have shown promise, supported by government subsidies under the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme. However, the overall penetration of EVs in the passenger vehicle segment remains low, with high upfront costs and range anxiety cited as major barriers to adoption. Industry analysts quoted in the report suggest that while the long-term outlook for EVs is positive, near-term growth may be constrained unless there are significant improvements in affordability and infrastructure.

Another critical aspect discussed in the article is the impact of global supply chain disruptions and rising raw material costs on the Indian automobile industry. Although the semiconductor shortage that plagued the sector in previous years has eased to some extent, manufacturers continue to face challenges related to the availability of critical components. Additionally, fluctuations in steel and aluminum prices have increased production costs, forcing some automakers to pass on the burden to consumers through price hikes. This, in turn, has dampened demand, particularly in price-sensitive segments like entry-level cars and two-wheelers.

The report also touches upon regional variations in sales performance across India. While urban markets have shown signs of saturation, rural markets, which account for a significant portion of two-wheeler sales, have been affected by erratic monsoon patterns and lower agricultural income. The article suggests that a normal monsoon in the coming months could revive rural demand, providing a much-needed boost to the industry. Furthermore, the upcoming festive season, starting with Navratri and Diwali, is expected to drive sales as consumers typically defer purchases to take advantage of discounts and promotional offers during this period.

In terms of specific manufacturers, the article does not delve into individual company performances but notes that market leaders in the passenger vehicle and two-wheeler segments are likely to face intensified competition as smaller players and new entrants introduce innovative products and aggressive pricing strategies. The growing popularity of SUVs in the passenger vehicle category is also mentioned, with consumers increasingly favoring utility vehicles over traditional sedans and hatchbacks, a trend that has reshaped the market landscape in recent years.

In conclusion, the Moneycontrol article paints a sobering picture of the Indian automobile industry’s performance in June 2024, with significant declines in passenger vehicle and two-wheeler sales reflecting broader economic and environmental challenges. While segments like three-wheelers have shown resilience, the overall outlook remains cautious, with recovery dependent on factors such as monsoon progress, festive demand, and government support. The industry is at a crossroads, balancing the transition to sustainable mobility with immediate concerns about demand and profitability. As inventory levels rise and consumer sentiment remains subdued, automakers may need to adopt innovative strategies, including discounts and new launches, to stimulate growth in the coming months. Despite the current downturn, the long-term potential of the Indian automobile market remains strong, driven by a young population, rising disposable incomes, and increasing urbanization. However, addressing structural challenges such as high costs, supply chain issues, and infrastructure gaps will be crucial for sustained growth. This comprehensive analysis, based on SIAM data and industry insights, underscores the complexities of the automotive sector in India and the need for adaptive measures to navigate the evolving landscape. (Word count: 1,102)

Read the Full moneycontrol.com Article at:
[ https://www.moneycontrol.com/automobile/domestic-passenger-vehicle-sales-drop-7-to-18-month-low-in-june-two-wheeler-sales-fall-3-siam-data-article-13279954.html ]